The end of the 2011 tax year is almost here and the IRS has sent a friendly reminder that it wants your tax filings soon. The final deadline to file your taxes is October 15. At least, it is for those taxpayers that filed for an extension back in April.
If you didn’t know, the IRS allows taxpayers to file an automatic six month extension. You can use the extra time to get all your paperwork in order. It also gives procrastinators some extra time to avoid the work.
However, this extension is only for the paperwork. Any taxes owed still needs to be paid by the April deadline. You would have to estimate and pay your taxes by then to avoid any penalties and interest.
If you filed for an extension this year, here’s a few helpful reminders and tax tips before filing your return:
- Double check your information
- Don’t overlook any credits or deductions
- Review the cost basis changes before reporting investment profit (or loss)
- I use and recommend TurboTax every year
You can track your refund through the Where’s My Refund? service provided by the IRS. To qualify for an extension next year, you can fill out IRS Form 4868. You can eFile it or print out the form and mail it in.
Prep For The 2012 Tax Year
Once you have your tax bracket locked down, you should focus on lowering your tax obligations.
The best place to start is with your retirement plan. You can open an IRA or add to your 401k and boost your retirement savings. Which gives you a nice deduction in return. The 401k contribution limits were increased for 2012 and you can check the IRA deductions limits to see if you qualify.
Lastly, the IRS has made several accounting changes over the past few years on cost basis reporting for investment profits and losses. Mutual funds were added to this list for 2012.
The end of the year is usually a time taxpayers look to sell investment losses to offset gains and lower their tax obligations. Make sure you specify the correct cost basis method at the time of sale. There’s no going back once the sale is finalized.
The 2012 tax year starts in just three short months. Now is a great time to get a head start on preparing for next year.